Early this week, the crude oil soared to a fresh 4-yearhigh, crossing above the psychological resistance level of $72. However, a surprise build up in crude oil stockpiles in the United States weighed on prices. For the moment, it’s trading near $71.54 and it looks like we may have a forex trading signal for crude. Are you ready for it?

On Wednesday, the EIA reported a massive build of 5.8 million barrels inventories, compared to analysts’ expectations for a decrease of -2.5 million barrels.

Secondly, investors are pricing in the sentiments that Organization of Petroleum Exporting Countries (OPEC) may decide to raise oil production to make up reduced supply from Iran and Venezuela.

Looking at the technical side, crude oil has entered the strong oversold zone. Here’s an upward trendline which can support oil near $71.25. So, here’s the deal, we may see a bullish reversal in crude oil if it manages to stay bullish above $71.25.  

Alternatively, a violation of $71.25 can push it lower towards $70.60.

Support     Resistance

71.35          72.17

71.1           72.42

70.69      72.83

Key Trading Level:    71.76

WTI Crude Oil – Trading Plan

The idea is to stay bearish below $71.75 to target $71.25. Second sell position will be preferred only below $71.20 to target 70.80. Good luck!